Final Results
Triad Group Plc
15 June 2007
Triad Group Plc
Preliminary announcement of audited results for year ended 31 March 2007
Chairman's statement
Business Review
Financial Highlights
• Revenue for the year ended 31 March 2007: £36.1m (2006: £42.7m)
• Operating loss after exceptional items: £0.87m (2006: £0.64m loss)
• Loss before tax: £0.99m (2006: £0.79m loss)
• Operating profit before exceptional items: £0.03m (2006: £0.25m loss)
• Gross profit as a percentage of revenue 17.4% (2006: 15.7%)
• Year end cash reserves £1.02m (2006: £1.77m)
Financial Review
This year has produced a very creditable performance with the Company reporting
a small operating profit before exceptional items of £32,000 (2006: loss of
£249,000). Operating loss after exceptional items of £873,000 (2006: £640,000
loss) and a loss before tax of £995,000 (2006: £791,000 loss) are both stated
after deducting exceptional administrative expenses of £905,000 (2006:
£391,000).
In the 6 months to 30 September 2006 the Company reported an operating loss of
£303,000 before exceptional items (6 months to 30 September 2005: loss of
£101,000). For the second 6 months of the year the Company is reporting an
operating profit of £335,000 before exceptional items (6 months to 31 March
2006: loss of £148,000).
Revenue has decreased to £36.1m (2006: £42.7m) largely as a result of a
reduction in the volume of low margin resourcing business. However, gross profit
as a percentage of revenue has increased to 17.4%. This is the fourth successive
percentage rise in as many years, reflecting the continuing move away from lower
margin activity, as I explain below.
Pre-exceptional administrative expenses have decreased by 10% to £6.26m (2006:
£6.97m) primarily as a result of a decrease in staff costs.
As previously reported, on 4 November 2006, a full and final settlement was
reached of the claim brought against the Company by its former Chief Executive,
Mira Makar. Costs relating to the claim totalling £1,223,000 are included within
exceptional items in the operating loss for the year (see note 3).
Also included in exceptional administrative expenses for the year is a credit of
£318,000 (2006: £nil) resulting from a change in the discount rate used in the
calculation of the provision relating to vacant property (see note 3).
Cash reserves at the year end were £1.02m. While a significant amount of legal
costs was still outstanding for payment at the year end, as at the date of this
statement all outstanding bills in relation to the settlement referred to above
have been paid, and the cash situation remains healthy. Cash control continues
to be a priority.
There have been no material bad debts in the year and debtor days at the year
end were 54 days (2006: 48 days).
Business Performance
The dependence of the resourcing business on low margin activities is now
largely behind us.
The originally identified niche markets such as retail system rollouts, retail
system support, GIS, storage and billing systems now form the key basis of our
technology specific coverage of niche sectors. The success of this approach has
led to our development into over 20 separate specialist niche sectors, which
have been identified for their potential for considerable growth over the coming
decade. Growth in these sectors is a key business objective, followed closely by
identification and penetration of new niche markets.
Charge rates and average margins have increased, and show the potential to
improve still further as we develop our business as a supplier in our chosen
niche markets.
As anticipated we have seen growth in the demand for strategic IT consultancy,
particularly around service-oriented architecture and security. Our development
and integration projects continue to focus on the delivery of business critical
systems involving web portals, business process management, databases and
electronic forms processing.
We continue to provide high-quality services within the public sector and have
been awarded new consultancy and systems development contracts. Our presence in
other sectors has increased with new engagements in both financial services and
telecommunications markets.
Utilisation in the IT systems and consultancy business remains high and we have
continued to recruit high-quality permanent staff including project managers,
architects, analysts and developers. Achievable rates have remained static due
to competitive pressures in the market place. Staff morale remains high and
staff attrition very low.
In recognition of our successful delivery of a number of Microsoft based
solutions Triad has attained Microsoft Gold Partner status. This has required us
to prove our capability to deliver solutions using Microsoft technologies
through references from satisfied clients and demonstrating our staffs'
technical expertise through the achievement of Microsoft professional
certifications.
Employees
On behalf of the Board I would like to thank staff for their efforts during the
past year.
John Rigg,
Chairman
14 June 2007
Consolidated income statement
for the year ended 31 March 2007
Note 2007 2006
£'000 £'000
Revenue 36,081 42,725
Cost of sales (29,791) (36,007)
-------------- --------------
Gross profit 6,290 6,718
Administrative expenses 3 (7,163) (7,358)
-------------- --------------
Operating profit/(loss) pre exceptional
expense/(credit) 32 (249)
Exceptional administrative expense: legal and
professional fees (1,223) (391)
Exceptional administrative credit: change in
surplus property provision 318 -
-------------- --------------
Operating loss (873) (640)
Operating loss (873) (640)
Finance income 18 43
Finance expense (32) ( 49)
Other finance losses (108) ( 145)
-------------- --------------
Loss before tax (995) (791)
Tax expense 6 (206) (16)
-------------- --------------
Loss for the year (1,201) (807)
-------------- --------------
Basic earnings per share 4 (7.93)p (5.33)p
--------- ---------
Diluted earnings per share 4 (7.93)p (5.33)p
--------- ---------
There is no recognised income or expense except for the loss for the periods
stated above therefore no separate statement of recognised income and expense
has been prepared.
Consolidated balance sheet
as at 31 March 2007
2007 2006
£'000 £'000
Non-current assets
Intangible assets 53 65
Property, plant and equipment 684 778
Deferred tax - 206
---------- ----------
737 1,049
---------- ----------
Current assets
Trade and other receivables 8,314 8,336
Cash and cash equivalents 1,019 1,767
---------- ----------
9,333 10,103
---------- ----------
Total assets 10,070 11,152
---------- ----------
Current liabilities
Trade and other payables (6,191) (5,631)
Financial liabilities (21) (18)
Short term provisions (205) (229)
----------- ----------
(6,417) (5,878)
---------- ----------
Non-current liabilities
Financial liabilities (17) (18)
Long term provisions (1,254) (1,701)
----------- ----------
(1,271) (1,719)
----------- ----------
Total liabilities (7,688) (7,597)
----------- ----------
Net assets 2,382 3,555
----------- ----------
Shareholders' equity
Share capital 151 151
Share premium account 562 562
Capital redemption reserve 104 104
Retained earnings 1,565 2,738
---------- ----------
Total shareholders' equity 2,382 3,555
---------- ----------
Consolidated cash flow statement
for the year ended 31 March 2007
2007 2006
£'000 £'000
Net loss (1,201) (807)
Adjustments for:
Tax 206 16
Depreciation of property, plant and equipment 370 396
Profit on disposal of property, plant and equipment (12) (20)
Amortisation of intangible assets 48 50
Interest income (18) (43)
Interest expense 32 49
Share-based payment expense 28 4
Changes in working capital
Decrease in trade and other receivables 22 3,666
Increase/(decrease) in trade and other payables 560 (1,232)
Decrease in provisions (471) (76)
-------------- --------------
Cash (consumed by) / generated from operations (436) 2,003
Interest paid (32) (49)
Interest received 18 43
Tax paid - (9)
-------------- --------------
Net cash flows from operating activities (450) 1,988
-------------- --------------
Cash flows from investing activities
Purchase of intangible assets (36) (27)
Purchase of property, plant and equipment (348) (443)
Proceeds from sale of property plant and equipment 106 169
-------------- --------------
Net cash flows from investing activities (278) (301)
-------------- --------------
Cash flows from financing activities
Finance lease principal payments (20) (24)
-------------- --------------
Net cash flows from financing activities (20) (24)
-------------- --------------
Net (decrease)/increase in cash and cash
equivalents (748) 1,663
Cash and cash equivalents at beginning of the 1,767 104
period
-------------- --------------
Cash and cash equivalents at end of the period 1,019 1,767
-------------- --------------
NOTES TO THE PRELIMINARY RESULTS
1. Basis of preparation
The preliminary announcement has been prepared using accounting policies
consistent with those set out in the financial statements for the year ended 31
March 2006.
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS and IFRIC interpretations), as adopted by
the European Union (EU), issued by the International Accounting Standards Board
(IASB) with those parts of the Companies Act 1985 applicable to companies
preparing their accounts under IFRS.
2. Preliminary announcement
The board approved the preliminary announcement on 14 June 2007.
The financial information set out in the announcement does not constitute the
Group's statutory accounts for the years ended 31 March 2007 or 31 March 2006.
Statutory accounts for 2006 have been delivered to the Registrar of Companies.
The statutory accounts for 2007 will be delivered to the Registrar of Companies
following the Company's annual general meeting. The auditors have reported on
the 2007 and 2006 accounts; their reports were unqualified, did not include
references to any matters to which the auditors drew attention by way of
emphasis without qualifying their reports and did not contain a statement under
section 237(2) or (3) of the Companies Act 1985.
3. Administrative expenses
Administrative expenses include a charge of £1,223,000 (2006: £391,000) for
exceptional administrative expenses in respect of legal and professional fees
which the group has been obliged to incur as a result of the situation regarding
Mira Makar, which has now been finalised, and a contribution to costs incurred
by Ms Makar in connection with the discharge of her duties as a director and
employee of the Company.
There is also an exceptional administrative credit of £318,000 (2006: nil)
resulting from a change in the discount rate used in the calculation of the
provision relating to the vacant property. The Directors have exercised their
judgement in respect of the change to the discount rate applied in the
calculation of the provision from an interest based rate of 5.75% to the
Company's weighted average cost of capital of 9.71%.
2007 2006
£'000 £'000
Administrative expenses 6,258 6,967
Exceptional administrative expenses: legal and professional fees 1,223 391
Exceptional administrative credit: change in surplus property
provision (318) -
---------- ---------
Total administrative expenses 7,163 7,358
---------- ---------
4. Earnings per ordinary share
Earnings per share has been calculated on the loss for the year divided by the
weighted average number of shares in issue during the period based on the
following:
2007 2006
Loss for the year £(1,201,000) £(807,000)
-------------- --------------
Average number of shares in issue 15,149,579 15,149,579
Effect of dilutive options * - -
_________ _________
Average number of shares in issue plus dilutive options 15,149,579 15,149,579
-------------- --------------
Basic earnings per share (7.93)p (5.33)p
--------- ---------
Diluted earnings per share (7.93)p (5.33)p
--------- ---------
* The share options have no dilutive effect in either the current or previous
years.
5. Dividends
No dividends have been paid or proposed for year ended 31 March 2007 (2006:
nil).
6. Tax expense
2007 2006
Analysis of charge in the year £'000 £'000
Current tax:
UK corporation tax on losses of the year at 30%
(2006: 30%) - -
Adjustments in respect of previous years - 9
-------- --------
Total current tax - 9
Deferred taxation 206 7
-------- --------
Tax expense in income statement 206 16
--------- ---------
Due to accumulated losses the directors believe that it is more likely than not
there will be insufficient profits in the short term to enable them to continue
to recognise the deferred tax asset in relation to temporary differences. The
amount charged to the consolidated income statement in relation to the deferred
tax asset is £206,000 (2006: £7,000).
The tax expense for the year differs from the standard rate of corporation tax
in the UK (30%). The differences are explained below.
2007 2006
£'000 £'000
Loss before tax (995) (791)
Loss before tax multiplied by standard rate of
corporation tax in the UK of 30% (2006: 30%) (298) (237)
Effects of:
Expenses not deductible for tax purposes 37 22
Adjustments in respect of previous periods - 9
Movement in unrecognised deferred tax asset in respect
of operating losses 302 222
Movement in unrecognised deferred tax asset in respect
of temporary differences (41) -
Unrecognised deferred tax asset in respect of temporary
differences at the start of the year 206 -
-------- --------
Total tax charge for the year 206 16
--------- ---------
A deferred tax asset of £2,334,000 (2006: £1,867,000) has not been recognised
because of the uncertainty of the timing of future profits. The unrecognised
deferred tax asset may result in any future profits being charged to tax below
the standard rate.
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